Notes to the Consolidated Financial Statements For the Year ended 31 December 2010 annual report 2010 | 127 Schedule of repayments of long-term bank loans (CZK thousand): Purpose Currency 2011 2012 Total Medium-term operating loan CZK 40,851 27,234 68,085 Security of long-term bank loans: Purpose Financing of B737 aircraft Medium-term operating loan Form of collateral promissory notes Full Flight Simulator Boeing B737 and MFTD A320 Simulator (Note 5)
Notes to the Consolidated Financial Statements For the Year ended 31 December 2010 annual report 2010 | 128 14. DERIVATIVE FINANCIAL INSTRUMENTS The fair value of commodity and financial derivatives is presented in “Other receivables” if positive, or in “Other payables” if negative. The derivatives can be analysed as follows: Positive CZK’000 31 December 2010 31 December 2009 Fair value Nominal amount CZK’000 Fair value Negative CZK’000 Positive CZK’000 Negative CZK’000 Nominal amount CZK’000 Trading derivatives Interest rate swaps 53,996 781,071 58,051 961,316 Currency swaps 436 1,166 582,931 Cash flow hedges 53,996 781,071 436 59,217 1,544,247 Currency forwards 2,368 1,364 150,360 10,818 146,395 2,094,619 Commodity collar 119,997 1,821,876 Commodity swaps 73,572 433,978 41,445 37,383 750,564 75,940 1,364 584,338 172,260 183,778 4,667,059 Total derivatives 75,940 55,360 1,365,409 172,696 242,995 6,211,306 The Group is exposed to fluctuations in fuel prices, interest rates and foreign exchange rates. In recognition of this fact, it is the Company’s policy to (i) balance any such risks internally as far as possible, (ii) control net positions in a way to produce the optimum effect on net income and (iii) hedge open positions wherever it is deemed necessary. The Group identifies particular future cash flows for which a hedging derivative instrument is arranged/concluded. While the Group designates all derivatives for the purpose of the economic hedge, the Group has certain derivative transactions, which provide effective economic hedges under the Group’s risk Management strategy, but hedge accounting is not applied to them. These are largely short-term derivative transactions and the application of hedge accounting would not have a significant impact on the financial statements while resulting in a significant administrative burden for the Group or some of the hedge accounting criteria are not met (for example, effectiveness). These derivatives are therefore presented as trading derivatives in the table above. Fair value changes of the trading derivatives are recognized in the profit and loss account. Fair value changes of the above-described cash flow hedging instruments are recognized in the “Gains and losses from the revaluation of assets and liabilities” within equity until the hedged items affect the profit and loss account. The “Gains and losses from the revaluation of assets and liabilities” in equity only includes the intrinsic value of currency options that hedge cash flows.
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